Automobile insurance premiums vary over time. The variations can be categorized as “normal” variations or “significant” variations. This invention seeks to mitigate at least one source of significant variations in an insured driver's automobile insurance rates so that said driver will be more satisfied with his or her insurance coverage.
FIG. 1 illustrates normal variations in auto insurance rates. FIG. 1 shows a bar graph 100 of the annual premiums for a given insured driver over a 10 year period. The premiums might go down in a given year due to such factors as the maturing of the driver, good driving record of the driver, or better financial performance by the insurance company providing the insurance.
Alternatively, the premiums might go up 102 in a given year due to such factors as poor driving record of the driver, overall inflation, and changes in the laws governing the types of losses that the insurance company must cover.
These factors may cause the premium to vary up to +/−20% and normally are not a cause of major concern for a typical driver.
FIG. 2 illustrates the occurrence of a significant variation in an insured driver's premiums. FIG. 2 shows a bar graph 200 of the annual premiums for a given insured driver over a 10 year period. In year 4, the driver had a significant increase 202 in premium.
A significant increase in premium can be due to such factors as adding a new driver to a policy, adding a new vehicle to a policy, or the insured driver moving to a “high loss” area. A high loss area might be an area that, for example, has a high auto theft rate or unusually high traffic density.
Insured drivers can also have significant decreases in premium. A significant decrease in premium can be due to such factors as removing an insured driver from an insurance policy, removing a vehicle from a policy and moving to a “low loss” area.
A change in premium is defined as significant if it is more than +/−20%.
A significant change in premium may alternatively be defined as when the change is more than twice what an insured driver normally experiences. For example, if a given insured driver normally sees year-to-year premium variations of only +/−5%, then a change of +/−10% would be considered significant.
A significant increase in premium will be noticed by an insured driver and can cause said insured driver to take action. The action might include shopping for a new insurance company or registering a complaint with said insured driver's state insurance department.
If a large number of insured drivers experience a significant increase in premium at about the same time or for the same reason, they may organize and take political action to address said reason for their increase. This is particularly true if the rate increase appears to be arbitrary.
A rate increase may appear to be arbitrary if the rate increase cannot be associated with any change in status of a driver, such as the addition of a new driver to a policy.
All states within the United States have laws and regulations that are designed at least in part to protect insured drivers from significant but arbitrary increases in their premiums. These laws and regulations, however, can have unintended consequences which actually cause the significant increases they were designed to prevent.
For example, a given state may pass laws and regulations that limit how much an insurance company can raise premiums in a given year. This may be acceptable to most insurance companies doing business in the state, but for some, particularly those that experience high losses, it may not allow them to continue to do business in the state. Hence these companies will leave the state and the drivers who had been insured by them will then have to seek insurance coverage from one of the state's remaining insurance companies.
Unfortunately when a large number of insured drivers have to switch from one insurance company to another, the act of switching will cause at least some of the drivers to experience a significant rate increase. This increase may appear to be arbitrary to a given insured driver since it will be perceived to be unrelated to any identifiable risk factor associated with said driver, such as whether or not said driver is a “good driver” or a “bad driver”. At least some of the drivers for whom said rate increase appears arbitrary may become irate, shop for new insurance companies, and/or lodge complaints with their insurance department.
Hence there is a long-felt need for a method of helping drivers switch from one insurance company to another without a large fraction of said drivers being subjected to significant but seemingly arbitrary increases in their insurance premiums.